LiveRamp Holdings, Inc.

Good afternoon, ladies and gentlemen, and welcome to LiveRAMP's fiscal third quarter 2022 earnings conference call. Your attendee lines will be muted during today's conference. After the speaker's remarks, we will have a question and answer session. To ask a question during that session, simply press star, then one on your telephone keypad. To withdraw your question, press the pound key. For the operator, press star, then zero. As a reminder, today's call is being recorded. Now I would like to turn the call over to Senior Vice President of Finance and Investor Relations, Lauren Dillard. Lauren?

Thank you, Operator. Good afternoon and welcome. Thank you for joining us to discuss our fiscal 2022 third quarter results. With me today are Scott Howe, our CEO, and Warren Jensen, President and CFO. Today's press release and this call may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For a detailed description of these risks, please read the Risk Factors section of our public filings in the press release. A copy of our press release and financial schedules, including any reconciliation to non-GAAP financial measures, is available at LiveRamp.com. Also during the call today, we will be referring to the slide deck posted on our website. At this time, I'll turn the call over to Scott.

Thank you, Lauren, and thanks to all of you for joining us today. We delivered another great quarter, highlighted by an acceleration in ARR growth, strong enterprise momentum, and continued operating efficiency. The market trends we discussed last quarter continue to play out, and our results in Q3 are strong validation of the critical value we deliver to our customers. I'll begin today by sharing some highlights from the quarter and then discuss the strength of our position going forward. Third quarter performance. Q3 was another strong quarter, and we again exceeded our guidance across all metrics. total revenue grew 17% and subscription revenue was up 19%. Normalizing for the wholesale contraction, total revenue grew 26% and subscription revenue was up 30%. Exiting ARR was up 26% excluding wholesale. Our land and expand selling motion continues to underpin our top line progress. In the quarter, we added 20 net new logos, and I remain impressed with the size and caliber of the customers we are adding to our roster. Notably, we are seeing particular strength in our large enterprise customer segment as a result of increased safe haven adoption. Our $500,000 to $1 million customer count was up more than 30%. and our $1 million-plus customer count grew to 86, an increase of 30% compared to prior year. SafeHaven also continues to be a big driver of account expansion. Given the breadth of use cases enabled by the platform, SafeHaven customers have higher ACVs and upgrade at higher price points. They currently account for roughly 20% of ARR, up from 12% a year ago. As we continue to upgrade our customer base to Safe Haven, our enterprise platform, we expect the average length and size of our contracts to continue to increase and churn and contraction to remain lower than what we have typically seen. Our subscription net retention in the quarter was 110%, or 120% normalized for wholesale. Beneath the top line, our gross margin expanded to 77%, and we remain profitable with operating margin again in the double digits. This performance is a reflection of the leverage in our model and demonstrates our continued ability to drive profitable growth at scale. Strategic position. This time of year often brings with it reflection, and as I reflect on our progress so far in FY22, across almost any dimension, I believe our position continues to grow stronger. Specifically, I would highlight two themes that give us great confidence for the future. First, as the world around us evolves, our importance to the ecosystem is increasing. Second, the investments we've made over the past several years are starting to pay off, and our opportunity is only growing larger. First, our importance to the ecosystem is increasing. live ramp's role in the marketplace has never been more important the global pandemic has significantly accelerated digital transformation timelines and forced organizations to rethink how they engage their customers at the same time consumer behavior and expectations have shifted and the days of one to many engagement are fading quickly personalization with privacy at its core is going to drive future business growth, and brands that can deliver on this expectation will be the new winners in the digital economy. Critical to this imperative is a strong first-party data strategy. And while some brands have been able to gain a competitive edge from their investments in first-party data, most still have not. According to the Boston Consulting Group, Only about 30% of companies are creating a single customer view across channels, and just 1% to 2% are using data to deliver a full cross-channel experience for their customers. With the rise of first-party data, LiveRamp's platform has become an essential buy for sophisticated companies. This megatrend has been a key driver of our recent success, and the runway here is long. Further, when customers and partners are faced with complexity, whether it be regulatory or ecosystem-related, what we do becomes even more important. GDPR spurred the development of Safe Haven. CCPA drove a six-quarter-plus period of elevated quarterly bookings. And recent changes to the identity landscape have significantly deepened our strategic and competitive advantage. For example, cookie deprecation drove our development of ATS and gave the industry a much better technology than what it is replacing. It has also opened up new markets internationally. ATS is the only scaled solution in the market today. It was architected to meet the more exacting requirements of GDPR and, again, is the only solution available to multinational companies that operate across the world. To date, over 500 publishers representing more than 11,000 deployed domains have integrated ATS worldwide, including Microsoft, Cafe Media, and Leaf Group. I'm very excited to share that Amazon Publisher Services has now joined this prestigious group. So what does this mean? It's a big deal. Tens of thousands of publishers who use Amazon can now leverage ATS to connect their authenticated inventory to global advertiser demand. Obviously, this meaningfully extends our global reach. Our identity momentum continues to be a strategic differentiator and key driver of recent wins. For example, in the quarter, we signed a new deal with a major multinational transportation and logistics company that is transforming its first-party data strategy. They selected LiveRamp in part because of our leadership with ATS. This enterprise is leveraging LiveRamp to integrate its first-party data with different advertising tools, display, social, search, as well as customer support and e-commerce enablement applications. Their vision is to power the entire customer experience with data, and we are a key partner in helping them achieve this. This is a great example of where we are going. Advertising becomes a first step to a much broader array of data-driven use cases. Second, the investments we have been making over the past several years are translating into real results, and our market opportunity is only growing larger. The growing need for first-party data and the new use cases we have introduced over the last few years are fueling the growth of our enterprise platform and opening up entirely new markets for us. In less than two years, Safe Haven customers represent more than 20% of our ARR and generate more than two times higher ARR than non-Safe Haven customers. And we believe we have the opportunity to upgrade our entire customer base to this enterprise platform over time. SafeHaven has also opened up entirely new addressable markets for LiveRamp, with retail and packaged goods being the most notable over the past year. In an effort to out-Amazon Amazon, retail media networks took off in 2021. Retail media spend is poised to grow over 30% this year to $41 billion. While retail media is but one data collaboration use case enabled by our platform, it has been a big catalyst of our recent growth in this space. For safe collaboration, it is critical retailers and their partners leverage a neutral infrastructure and technology that protects their data, restricts its movement, and governs access. We serve more than 60% of big box retail in the U.S., and in the third quarter, I am excited to share that we added Walmart and JD.com as safe haven customers. Our success is not limited to retail, and we are seeing emerging demand in industries like healthcare and financial services that regularly manage highly sensitive data. For example, In the quarter, we signed a seven-figure expansion deal with a major financial services provider who is standing up a joint solution with a top health insurer. These organizations are leveraging our platform to understand the overlap of their respective customer bases, build new audience models, better engage existing and prospective members, and measure the effectiveness of their co-marketing efforts across all touchpoints. These are two organizations that take data privacy and security very seriously, and they selected LiveRamp because of our leadership and privacy, as well as our best-in-class identity and collaboration tools. A recent question we've received from many of you, is how Safe Haven differs from other clean room tech out there. Paraphrasing what one of our major financial services clients recently told us, there are other clean rooms out there, but we would be forced to work with a separate identity provider. With LiveRamp, we get the gold standard, data privacy, identity, and collaboration. We're succeeding across industries, and we also intend to succeed across geographies. International-produced record bookings in Q3 and the global scale and reach of Safe Haven, combined with ATS, has driven an acceleration in global deals. For example, In Q3, we signed a six-figure new deal with a major multinational hospitality group across five global markets. This organization selected LiveRamp to help better leverage and integrate its first-party loyalty data within its media buying platforms, Display, Search, and Social. They intend to win back loyal customers ahead of what they believe will be a rebound year for travel. And another example. Last quarter, we also closed a large expansion deal with a multinational B2B technology company that spans five international markets. These aren't one-offs. On an earnings call earlier this fiscal year, Diego, our chief commercial officer, shared a goal of 20 global deals in FY22. Today, we are at more than 30 with additional opportunities in Q4. New use cases and capabilities, industry expansion, global scope. Our opportunity is growing. With that, Thank you again for joining us today. And a special thanks to our exceptional customers, partners, and to all live rampers across the globe for their ongoing hard work and support. Fueled by them, we delivered another strong quarter in Q3 and have our sights set on a strong finish to FY22. With that, I will now turn the call over to Warren.